London’s housing crisis compounded by construction costs
London’s housing crisis will get worse unless immediate action is taken to tackle inflated construction costs, industry leaders have warned. London Assembly Labour’s Housing spokesperson Sem Moema AM and the G15, a group of London’s largest housing associations, co-hosted a social housing summit at City Hall on 24 February to address the key challenges facing the sector. Ms Moema called on the government to urgently address inflation and to work with City Hall, housing associations and councils to deliver the good quality, affordable, homes all Londoners deserve.
Brexit, the pandemic and the invasion of Ukraine caused supply chain disruption, labour shortages and increased costs, with construction inflation peaking at nearly 17% in April 2022.
The social rent cap announced by government, at a below inflation 7%, maintenance, fire safety and retrofit works have reduced the capacity of providers to deliver social housing. An estimated 12% of social housing in London does not meet the Decent Homes Standard.
London needs 66,000 new homes built a year to cope with demand, of which around 65% should be genuinely affordable, the Greater London Authority’s (GLA) London Strategic Housing Market Assessment found. To meet the scale affordable housing needed, London requires an additional £4.9 billion per year – seven times more than the current level of investment – from the government, according to a GLA report.
Last year the Mayor of London, Sadiq Khan, started a record 18,722 affordable homes – more than half of which were for social rent. Completions of homes also topped 10,000 – more than double the number achieved under the previous Mayor in the final year of his Mayoralty in 2015/2016.
Last week the Mayor froze funding to three social housing providers in London – ChristianActionEnfield, Industrial Dwellings Society and Swan – in a crackdown on poor performing landlords in the capital.